MARKET DEVELOPMENT
RHB Research Keeps Bullish View of Plantations
RHB Research Keeps Bullish View of Plantations
01/04/2014 (The Star) - RHB Research is maintaining its bullish view of the plantation sector as the recent price pullback is a buying opportunity before the next leg of upswing.
It said on Tuesday that the upswing should be even stronger due to deteriorating supply.
“We continue to like First Resources (Buy, FV: S$2.86), Astra Agro Lestari (Buy, FV: Rupiah 29,291), and IOI Corp (BUY, FV: RM5.11). We also like growth stocks Jaya Tiasa (BUY, FV: RM2.95), Sawarak Oil Palms (Buy, FV: RM7.04) and Bumitama (Buy, FV: S$1.39).
RHB Research said over the past month, the Southern Oscillation Index (SOI) has fallen to negative 13, that is El Nino territory.
“We are now watching out for on-the-ground confirmation of an El Nino heat wave, which we believe will be evident this month,” it said.
RHB Research also said Malaysia's palm oil inventory was already at a 2013 trough of 1.66 million tonnes, with another two to three months before hitting trough.
“We believe palm oil inventory could fall below 1.4 million tonnes, giving rise to supply concerns and resulting in a further narrowing of its discount to soybean oil. Oil World now expects palm oil to trade at a premium to soybean oil within the next two months due to tight supply,” it said.
RHB Research believed the sector's price correction is close to ending. With the bull market intact, investors who did not participate in its earlier rally should take the opportunity to load up on plantation stocks.
It said on Tuesday that the upswing should be even stronger due to deteriorating supply.
“We continue to like First Resources (Buy, FV: S$2.86), Astra Agro Lestari (Buy, FV: Rupiah 29,291), and IOI Corp (BUY, FV: RM5.11). We also like growth stocks Jaya Tiasa (BUY, FV: RM2.95), Sawarak Oil Palms (Buy, FV: RM7.04) and Bumitama (Buy, FV: S$1.39).
RHB Research said over the past month, the Southern Oscillation Index (SOI) has fallen to negative 13, that is El Nino territory.
“We are now watching out for on-the-ground confirmation of an El Nino heat wave, which we believe will be evident this month,” it said.
RHB Research also said Malaysia's palm oil inventory was already at a 2013 trough of 1.66 million tonnes, with another two to three months before hitting trough.
“We believe palm oil inventory could fall below 1.4 million tonnes, giving rise to supply concerns and resulting in a further narrowing of its discount to soybean oil. Oil World now expects palm oil to trade at a premium to soybean oil within the next two months due to tight supply,” it said.
RHB Research believed the sector's price correction is close to ending. With the bull market intact, investors who did not participate in its earlier rally should take the opportunity to load up on plantation stocks.